On Wednesday, the US dollar is traded at 12-year highs against its Canadian rival, as fears of global geopolitical tensions are putting pressure on risk appetite, while positive US data supported demand for the greenback.
During early US trade, USD/CAD pair reached 1.4109, the peak from August 2003 and subsequently consolidated at 1.4083, rising 0.64%.
The pair is likely to find support at 1.3892, Tuesday's low, and resistance at 1.4170.
Investors remain cautious after North Korea confirmed on Wednesday that it had conducted a nuclear test and said it does not intend to reduce nuclear potential unless the US abandons its hostile policy toward it.
Markets are also worried about the growing tension in the Middle East after the attack on Saudi embassy in Tehran in response to the execution of a well-known Shia preacher.
Meanwhile, the dollar got support after ADP reported that the number of people employed in the non-agricultural sector of the US increased last month by 257 000, well above expectations for an increase by 192 000. In November, the US economy created 211 000 jobs, the figure being revised down from 217000.
A separate report showed that the US trade deficit narrowed in November to $ 42.37 billion from $ 44.58 in October, the figure being revised up from $ 43.90 billion. Analysts had expected US trade deficit to be reduced in November to $ 44.0 billion.
Earlier, data showed that the trade deficit narrowed in Canada in November to C$ 1.99 billion from C$ 2.49 billion October, the figure being revised from a deficit of C$ 2.76 billion. Analysts had expected the trade deficit to expand in November to C$ 2.60.
The Canadian dollar fell against the euro, EUR/CAD rose 0.57% to 1.5124.
On Wednesday, the pound fell to a nine-month low against the dollar after data showed that activity in the UK services sector expanded in December at a slower pace than expected, while market sentiment remained under pressure.
During European morning trade, GBP/USD reached 1.4620, the lowest level since April 2015, and subsequently consolidated at 1.4638, shedding 0.22%.
The pair is likely to find support at 1.4563 and resistance at 1.4725, Tuesday's high.
Markit research group said that its index of business activity in the UK services sector fell to 55.5 last month from 55.9 in November. Analysts had expected the index to fall to 55.6 in December.